Office of the Assistant Deputy Under Secretary of Defense (Logistics and Materiel Readiness) Materiel Readiness and Maintenance Policy

Warfighter Combat Capability Government Logistician Product Support Goal Warfighter Combat Capability Ensure a Ready and Controlled Source Capable of Providing Combat Ready Weapon Systems Anytime and Anywhere Efficiently and Effectively. Program Manager Private Sector Government Logistician Partnering

Partnering is a Cooperative Effort Not a Competitive Engagement What Is “Partnering” Partnering is a Logistics Sustainment Philosophy involving a Cooperative Agreement among: Program and/or System Support Manager Original Equipment Manufacturer and/or other Private Sector Firm[s] Service Maintenance Depot[s] DoD’s Goals for Partnering include: More Responsive Product Support Increased Facility Utilization Improved Depot Processes and Technology Reduced Cost of Ownership Partnering is a Cooperative Effort Not a Competitive Engagement

When Should We Partner? Organic Support CLS ORGANIC Public/Private Contractor Support Organic Support CLS ORGANIC More Organic More Commercial MAJORITY SUPPORT CONTRACT Public/Private Partnering Opportunities MIX I hope that this chart is not copyrighted because at least some version of it has been shown all over the DOD. I think it is important because it captures the challenge and possibilities available when we pursue partnering. Through partnering we are sliding the MIX box along the scale between organic and contract support until we find the best mix of public – private logistics support. Notice that neither the right nor left blocks contain “all government” or “all contractor” support. We simply do not have any weapon systems where there is no participation by either party . . . We are in this business together. Like everything in the logistics business…the devil is in the details. Our partnering challenges are to: (1) find the best mix of public & private support (2) find innovative (low cost) ways to implement the best solutions (3) develop the appropriate documents and authorities to implement an effective partnership (4) know when to change this mix as the weapon system evolves and/or the warfighter needs change over the long haul. GOAL: Leverage Innovative Concepts of the Private and Public Sectors to Support the Warfighter at the Best Value for the Department of Defense and the Taxpayer

Available Depot Capabilities Depot Capabilities that are available through partnering: Manufacturing – Including the fabrication of parts, assembly of components, final assembly, and painting of end items. Repair – Including diagnostics, refurbishment, overhaul, and rebuild. Technical Services – Including testing and analysis, repair process design, and in-service engineering.

All Stakeholders Can Benefit from Depot Maintenance Partnering Organic Depots: New Investments Preserve Skilled Workforce Enhance Operating Efficiency Access to Technical Support Commercial Firms: Access to Process Permits Minimize Process Flows Long-term Agreements Avoid Investment in Duplicative Capabilities Warfighter: Improved Logistical Support Improved Responsiveness Technology Infusion Increased Reliability DoD Program Manager: Avoid Investments in Duplicative Permit Single-Point Accountability Compliance with Statutory Constraints All Stakeholders Can Benefit from Depot Maintenance Partnering Lesson Title = Government Benefits. Program Offices/ICPs. Benefits to Maintenance Depots. Industry Benefits. Private sector use of public sector equipment and facilities to perform work for the public sector. War Fighter Benefits. PBL/Partnering.

Partnering is a PBL Enabler Depot maintenance partnerships can be an effective mechanism for fully implementing a Performance Based Logistics strategy, while complying with Title 10 requirements Strategy: When the PBL contractor subcontracts an appropriate portion of the depot maintenance workload to a public sector maintenance depot, this support provides: Compliance with core logistics and the 50 percent limitation Single point accountability and responsibility in the PBL contractor

Growth in Partnering Depots Trend line shows cumulative participation. Naval Surface Weapon Center – Crane is the FY04 addition. Only AMARC does not have a DM partnership.

Growth in Industry Partners Separately identified business units are counted as distinct partners. Trend line shows net participation. 115 partners are mentioned in reported data; 88 are participating in partnerships at end FY04 [due to completed partnerships]. Almost 60% of the 60 partnerships created in FY04 are with one of the 20 largest Defense contractors.

Growth in Partnerships Total Partnerships Created = 206 Trend line shows net ongoing partnerships. 206 partnerships have been formed through end FY04. 132 partnerships were ongoing at the end of FY04.

Depot Maintenance Partnerships Can Take Many Forms Range of Possibilities Includes: Depot provides articles and/or services to industry Industry leases depot equipment and/or facilities Performs work for either the public or private sector Worksharing arrangements Teaming arrangements where depot and industry jointly contract with a Program Manager An arrangement between the public and private sectors for one or more of the following: Use of public depot maintenance activity & employees to provide articles and/or services for the private sector Private sector use of public depot maintenance activity equipment and/or facilities to perform work for either the public or private sector Worksharing arrangements, using both public depot maintenance activity and private sector facilities and/or employees Teaming arrangements whereby a public depot maintenance activity and a private entity enter into a contractual relationship with the DoD in order to accomplish the tasks specified in the contract

Distribution by Type of Partnership Arrangement 84 Partnerships Incorporate Two or More Arrangement Types

Benefits Are Being Realized From Depot Maintenance Partnerships

“Stryker” Vehicle Anniston Army Depot General Dynamics Land Systems Partners Anniston Army Depot General Dynamics Land Systems Scope At last count there were 32 partnering programs at Anniston Army Depot. I’d like to highlight two of them. The first involves the Stryker Vehicle, known until a few weeks ago as the Interim Armored Vehicle. Start Date = FY 2001 End Date = FY 2007 This is a Sale of Services arrangement Anniston personnel work side-by-side with General Dynamics Land Systems employees to perform Stryker Vehicle assembly using components manufactured elsewhere. Anniston also performs final vehicle paint and some other production services. GDLS has a facility use agreement for three separate facilities at Anniston and is provided the use of the test track complex in support of this program. GDLS also purchases utilities, hazardous waste disposal, fire protection, health services, security, etc. from Anniston. Stryker Vehicle Assembly

AGT 1500 Recuperator Anniston Army Depot Honeywell International AGT 1500 Engine Anniston Army Depot Honeywell International Partners Scope Recuperator Manufacturing START DATE = FY 1998 END DATE = Ongoing The AGT 1500 engine is used on the M-1 tank. The recuperator is a sophisticated heat exchanger used to warm inlet air for the engine. Manufacturing capabilities were provided by Honeywell at the Strafford, CT government plant. As part of BRAC 95, that plant was identified for closure and Honeywell sought to relocate the operations. Anniston offered them space. This is a facility use arrangement – Honeywell occupies 30,000 sq ft of former warehouse space for the Recuperator Core Facility. Honeywell also purchases utilities, local transportation, fire protection, health services, security etc. from Anniston. Anniston also provides production support services as a subcontractor to Honeywell.

Auxiliary Power Units NADEP Cherry Point Honeywell International CAT Logistics Partners Scope Repair of APUs and field technical support START DATE = June 2000 END DATE = June 2010 Contract period is 10 years, with a 5 year base period with 5 one-year incentive periods This is a Sale of Services arrangement – it’s part of a performance- based Total Logistics Support contract involving Honeywell, CAT Logistics and NAVICP. Involves 4 different APUs used on F/A-18, P-3, S-3, and C-2 aircraft. 1st Navy Public private partnership where a NADEP is subcontractor to an OEM.

F/A-18E/F Integrated Readiness Support Teaming (FIRST) Partners Scope NADEPs (3) Boeing Military Aerospace Support NADEPs provide depot repair for unique components START DATE = June 2001 END DATE = June 2006 (if all option years exercised) The FIRST partnership is a sale of services arrangement involving all three Naval aviation depots and Boeing As items come off ICS and the operating fleet expands, all repair of peculiar E and F components will eventually be accomplished by the NADEPs FIRST is a Performance Based Logistics (PBL) contract worth $770 million if all three options are exercised for a five-year performance period Under the PBL arrangement, Boeing is incentivized to improve supportability, readiness, and mission capability, while reducing product support costs and providing life cycle product management

JSTARS Joint Surveillance Target Attack Radar System Warner Robins Air Logistics Center Northrop Grumman Partners Scope Repair and maintenance of: Prime mission equipment Ground support systems Software JSTARS Joint Surveillance Target Attack Radar System My next example involves the E-8C Joint Surveillance Target Attack Radar System (JSTARS) aircraft. START DATE = Dec 2000 END DATE = FY 2007 This is a Government Furnished Supplies and Services arrangement – it’s part of a Total Systems Support Responsibility (TSSR) contract. Warner Robins performs maintenance and repair of: Prime mission equipment Ground support systems Software Depot also provides technical services such as chemical analysis and precision measurement equipment calibration. Northrop Grumman determines depot’s work requirements and provides sustaining engineering. Benefits of collocated functions include reduced transit times and inventory requirements, and improved system availability.

LANTIRN Low Altitude Navigation and Targeting Infrared for Night Partners Warner Robins Air Logistics Center Lockheed Martin Scope On-Site Repair and Maintenance of: Shop-Replicable Units (by WR-ALC) Line-Replaceable Units (by LM) Complete Pods and Modules (by LM)

B-2 Composites Ogden Air Logistics Center Northrop Grumman Partners Scope Manufacture and repair of Composites Low-observable components START DATE = Oct 98 END DATE = Ongoing This is a workshare arrangement involving a teaming agreement between Air Force Materiel Command and Northrop Grumman to provide the Ogden Air Logistics Center with an advanced composites and low observables manufacturing and repair capability. As Northrop Grumman completed primary build and mod phases of B-2 program, the large capacity of its Pico Rivera facility was no longer needed Initial phase of partnership was to: Transition manufacturing equipment from Pico Rivera, CA to Hill Construct facilities and install equipment at Hill Transition computer systems and databases Train Government manufacturing and support personnel in B-2 composites techniques Ogden B-2 Composites Repair Facility was culmination of $33M skills and modernization project

Partnering Can be a Winning Strategy for All Conclusion Partnering Can be a Winning Strategy for All Win for Warfighter A Weapon System—Ready When Needed Win for Acquisition Offices Single-Point Accountability to Maximum Extent Practicable Optimum Solutions for Weapon System Balanced with Overall Service Objectives Win for Industry Utilization of Existing & New Organic Investments Profits / Reputation Associated With Partnerships Win for Organic Maintenance Depots Workload to Maintain Core Capabilities In summary, recall that partnering can be a winning proposition for all parties. I believe that if we approach public-private partnerships from the angle of cooperation—and not competition—we can move a lot closer toward our common objective of providing the warfighters with the most efficient and effective (world class) support ever. Thank You.

For Further Information About Partnering, Go To: http://www.acq.osd.mil/log/logistics_materiel_readiness/organizations/mppr/html/dmp.htm

- Authorities and Additional Examples - Reference Charts - Authorities and Additional Examples -

General Themes of Partnering Authorities Partnerships can exist without statutory authority Statutory authorities have restrictions, conditions Depot involvement generally supports Existing DoD contracts or Goods/services not available in private sector Generally, government will not compete with private sector In some cases proceeds reimburse the DoD account incurring partnership-related costs

Authorities

Authorities (continued)

Army Examples M1/M1A2 Upgrade at Anniston with General Dynamics Disassemble, hull upgrade, turret demil, overhaul of subassemblies & components - Ship to Lima OH Firefinder Block II Program at Tobyhanna with Raytheon Design, fabricate, & integrate prime power group & vehicle communications Multiple Launch Rocket System M270A1 at Red River with Lockheed Martin Overhaul vehicle and ship to L-M for integration of upgrades M1 Recuperator Facility Use at Anniston by Honeywell Provide 30K sqft of former warehouse space to Honeywell for use as a manufacturing facility The M1/M1A2 Upgrade and the MLRS are Workshare arrangements The M1 Recuperator is a Lease under 10 USC 4543 The Firefinder is a Sale of Services under 10 USC 2208(j)

Navy Examples F/A-18E/F Components at All Naval Air Depots with Boeing Performance based logistics with organic depots providing repair services Auxiliary Power Unit - Direct Vendor Deliver at Cherry Point with Honeywell Repair of items and field team support Amphibious Assault Vehicle - RAM & Rebuild to Standard at Albany with United Defense Disassemble vehicles, ship bare hulls to United Defense for modification, upon return finish rebuild AV-8B Remanufacture Program at Cherry Point with Boeing-BAE Team Disassemble aircraft & reuse/refurbish components for stock The AAV is a Workshare arrangement The F/A-18E/F, APU and AV-8B are Sale of Services under 10 USC 2563

Air Force Examples C-17 Structures and Avionics at Warner-Robins with Boeing Identify hidden defects, deteriorating conditions, corrosion, fatigue, overstress, & other structure conditions JSTARS Total System Support Responsibility at Warner-Robins with Northrop Grumman Provide repair of prime mission equipment, software support, and backshop functions B-2 Composite Manufacture & Repair at Ogden with Northrop Grumman Manufacture and repair of composite & low observable components LANTIRN Phase I at Warner-Robins by Lockheed Martin Facility use for contractor at WR-ALC for component repair The C-17 is a Sale of Services under 10 USC 2563 The B-2 is a Workshare arrangement The JSTARS and LANTIRN are Government Furnished Resources under FAR 45.3